Last Updated on April 15, 2026 by Deon
USD/CAD Under Pressure: Why the Loonie is Gaining the Upper Hand
If you’ve been watching the USD/CAD charts lately, you’ve likely noticed a consistent theme: the “Loonie” is holding its ground while the US Dollar is struggling to find its footing. According to a recent deep dive from Scotiabank, the pair is currently locked in a bearish trend that doesn’t look ready to shift just yet.
But what does this actually mean for traders and those watching the exchange rate? Let’s break down the current movement without the heavy jargon.
The 1.37 Battleground
Right now, the market is playing a game of “wait and see” between the 1.37 and 1.38 levels. Think of this as the critical zone where the next big move will be decided.
- The Floor (Support): Traders are keeping a very close eye on the 1.3690 to 1.3745 range. This is the safety net; if the price slips below this, we could see the “slippery slope” effect where the pair drops much faster.
- The Ceiling (Resistance): Every time the US Dollar tries to climb back above 1.38, it hits a wall. As long as it stays under this “ceiling,” the bears—those betting on a lower price—are effectively in the driver’s seat.
Is the US Dollar Still Overpriced?
Interestingly, many analysts believe the pair is still a bit “expensive.” While we are seeing it hover around 1.37, some valuation models suggest that the “fair value” is actually closer to 1.35.
It’s important to note that this isn’t necessarily because the Canadian economy is booming—it’s more about the US Dollar losing its luster on the global stage as the market adjusts its expectations for the Federal Reserve.
What’s Moving the Needle?
Several factors are working together to keep the pressure on:
- US Dollar Fatigue: Across global markets, the USD is losing the “invincible” status it held recently.
- Central Bank Tug-of-War: Investors are trying to guess who will cut interest rates first—the Fed or the Bank of Canada.
- Seasonal Vibes: Historically, this time of year tends to be a bit kinder to the Canadian Dollar.
The “What If” Factors
Of course, no trend is guaranteed. The bearish momentum could hit a roadblock if we see:
- An unexpected spike in US inflation data.
- A sudden drop in oil prices (which usually drags the Canadian Dollar down with it).
- The Federal Reserve taking a much more aggressive stance on keeping interest rates high.
The Final Word
For now, the momentum is clearly pointing down. Unless the US Dollar can find a major catalyst to break back above 1.38, expect the pressure to remain. The 1.37 level is the next major hurdle—and watching how the market reacts there will tell us a lot about where we’re headed next.
